Business Across Borders – Understanding International Trade

International trade is a complex process, but also an exciting business opportunity. DHL can help not only with global customs requirements and trade terminology but also with local import and export support and resources.

Learning the Language of Incoterms® Rules and Trade Terms

“Incoterms” is a trademark of the International Chamber of Commerce. Incoterms® rules and trade terms are recognized and accepted as the standard for international trading and are regularly updated as commercial conditions change.

Familiarity with Incoterms® rules will ensure you purchase goods from manufacturers abroad in accordance with applicable regulations, documentation and procedures.

The main objective of Incoterms® rules is to define criteria for the distribution of expenses and the assignment of risk between parties involved in international transactions.

Incoterms® rules serve to standardize the process of shipping and receiving merchandise. In addition, they determine the cost allocation of international commercial transactions and establish agreed responsibilities for exporters and importers.

Incoterms® 2010 rules are classified into two categories according to the mode of transport.

Incoterms® Definition

EXW

Ex Works

The seller's only obligation is to make the goods available at its premises or at another named place (works, factory, warehouse, etc.). The buyer bears all costs and risks involved in taking the goods from the seller’s premises to the desired destination. This term represents the minimum obligation for the seller.

FCA

Free Carrier

The seller’s obligation is to hand over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point. The parties are advised to specify as clearly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.

CPT

Carriage Paid To

The seller pays the freight for the delivery of goods to the carrier or to another person nominated by the seller at the named destination. Once delivered, the risk of loss or damage to the goods is transferred from the seller to the buyer. This term requires the seller to clear the goods for export.

CIP

Carriage and Insurance Paid To

The seller has the same obligations as under CPT but has the responsibility of obtaining insurance against the buyer’s risk of loss or damage to goods during carriage. Insurance only needs to be obtained at minimum coverage and the seller is required to clear the goods for export.

DAT

Delivered At Terminal

The seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. “Terminal” includes quay, warehouse, container yard or road, rail or air terminal. The seller is responsible for the export clearance procedures and the importer is responsible for clearing the goods for import, arranging import customs formalities, and paying import duty.

DAP

Delivered At Place

The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. The seller is required to clear the goods for export and the importer is responsible for effecting customs clearance, and paying any customs duties.

DDP

Delivered Duty Paid

The seller is responsible for delivering the goods to the named place in the country of importation, including all costs and risks in bringing the goods to import destination. This includes all export and import duties, taxes and customs formalities.

There are four terms in this category:FAS (Free Alongside Ship), FOB (Free On Board), CFR (Cost and Freight)CIF (Cost, Insurance and Freight)

These terms are listed for your information only as they are not needed when sending shipments with DHL Express.

The Incoterms® Chart of Responsibility provides an overview of the exporter’s and importer’s obligations within each category.View Chart of Responsibility

Use of Incoterms® trade terms is not a legal requirement, however using them is always recommended to simplify transactions, reduce misunderstandings with those you do business with.

Learning about Customs with DHL

DHL Express has been a global expert in international trade for well over 40 years and now processes several million customs entries every day. As one of the world's largest customs brokers, we use local expertise to understand diverse customs regulations.

That’s why, with DHL as a partner for your small business, its in-house experts are well positioned to help you navigate the complexities of customs compliance and all of the related terminology and guidelines. Understanding the processes and terminology involved will help you enter markets and build a long-term foundation for successful international trade.

The importance of understanding the Customs requirements of each country that you trade with cannot be overstated. National regulatory bodies will use your customs documentation to verify the contents of your shipment, its value, country of origin and other factors to determine the amount of duties and taxes that are due on the goods. You therefore need to ensure that your documents are as detailed as possible.

Failure to complete proper documentation or adhere to the rules regarding shipping to another country can cause considerable delays, so it is important to pay close attention to this aspect of international trade. Inadvertently trying to import controlled or restricted goods can cause long-term problems for your business.

However, with DHL to support and reassure you every step of the way, this type of drama can be avoided. Therefore, feel free to call on our close relationships and historical ties with customs organizations around the world to help your international business succeed. Our local DHL Express Customs experts will always be there for you.

Every country has a variety of requirements, agreements, regulations and laws regarding importing and exporting. Because all countries depend on international trade as an important element of their economic growth, most publish helpful web-based information to guide importers or exporters doing business with that country. Therefore, it is still always highly recommended to contact destination country border authorities or consult their websites.

These are the reasons why DHL is the best partner for all Customs-related issues:

More than 40 years direct experience in managing customs clearance

More than 1,200,000 formal import customs declarations processed each month

More than 4,350,000 import shipments processed each month

First-hand experience in handling complex customs clearance

Electronic declaration capabilities (EDI)

Sri Lanka Customs (SLC) is the governing authority which sets up rules and regulations with regard to custom matters. Sri Lanka being an island, the Airports and Ports (harbor) are the 2 gateways for legitimate trade. SLC are based in both the gateways to administer the clearance process and to perform other customs formalities. In addition, SLC have set up offices in several other places as well taking into consideration the value addition they could provide to the betterment of Trade. By giving the full meaning to the word “custom office” in the ordinance, which is “any place for the transaction of customs business”

Sri Lanka is a signatory to the Kyoto convention, adopting the “Risk Managers’” role is fundamental in order to strike a balance between regulatory compliance and Trade facilitation. SLC consider that achieving regulatory compliance is a collective effort. Both parties i.e. SLC and trading parties should fully understand the law and also should know their roles and responsibilities towards it.

SLC is very much client focused as well. They adopt many flexible administrative procedures to facilitate trade.

What You Need to Know about Exporting

Sri Lanka Export regulations play a pivotal role in control & monitor foreign trade. For example some of the goods that exported have to go under formal clearance whilst other may be allowed to export under a block CUSDEC entry.The value & the nature of the goods will determine the customs regulations applicable for the commodity exported from Sri Lanka. Based on the regulations applicable for each commodity DHL will ensure to facilitate & accommodate the clearance requirement by coordinating with the shipper.

This short profile of the Sri Lanka market was prepared by the Australian Trade Commission (Austrade), the Australian Government’s trade and investment development agency. It reviews Sri Lanka’s economic climate and provides information and statistics about trade relations.Austrade : Market Profile

Austrade reviews Sri Lanka market entry strategy, negotiations and etiquette. Links from this page also offer information about such topics as tariffs; methods of quoting and payment; intellectual property; and various documentation and tax issues.Austrade – Doing Business

UK Trade & Investment, a division of the government of the United Kingdom, created this downloadable PDF report on doing business in Sri Lanka. The report provides introductory information about the market, advice to companies that want to export to or do business in Sri Lanka, and a guide to etiquette, language and cultural concerns.GOV.UK’s Exporting to Sri Lanka

Fulfilling all Customs requirements and correctly completing all procedures can be especially difficult for small business owners or those who are exporting for the first time. If you find the process too difficult to manage on your own, contract a Customs broker who can guide you through the export process. This will help to ensure that you realise your foreign commerce transactions in the simplest and most correct manner.

DHL recommends that you do not seek a Customs broker on your own. Our personal advisors can analyse your shipping needs with you and put you in touch with a trustworthy broker who knows your industry and can provide the specific experience and services your business needs. With our extensive network of accredited, trustworthy brokers, we are in a position to find the broker best equipped to meet your company’s export needs. It is our pleasure to offer this service to our clients.

Please note: In some countries, the law requires you to contract a Customs broker to complete your export transactions. In others, the Customs service recommends that you contract a broker.

Any permitted export commodity falling under the below three categories many not require a Formal Export Customs entry / CUSDEC to be produced in order to Export from Sri Lanka

Commodities that have commercial value / declared value for customs purposes is less US$100

Number of pieces under one waybill is less than 30

The total weight of the shipment is less than 5kgs

All commodities exceeding any of the above parameter will have to accompany with a Formal Export Customs Entry / CUSDEC which has to be produce by shipper or DHL. This rule is applicable for all commercial quantities.

Documents Necessary To Prepare An Export Goods Declaration:

Customs Declaration (CUSDEC)Licenses and permits if requiredShipping Note/Airway BillInvoicePacking List and other supporting documents as and when necessaryCustoms Declaration (CUSDEC)

This should be submitted in 4 copies with an additional copy each for bonded cargo and airfreight cargo. These copies are named as Warrant copy, Statistical copy, Security copy, Parties copy, CBD copy and Air cargo copy. When exporting liquor and coconut products excise copy and CDA (Coconut Development Authority) copy should be attached respectively. This declaration requires to be submitted along with the other documents mentioned above for processing.

What You Need to Know about Importing

In Sri Lanka Import regulations play a pivotal role in control & monitor foreign trade. For example some of the goods that imported have to go under formal clearance whilst other may be allowed to be pre-cleared with the usage of “Clear In Air” facility granted for DHL Sri Lanka.

The value & the nature of the goods will determine the customs regulations applicable for the commodity imported to or from Sri Lanka. Based on the regulations applicable for each commodity DHL will ensure to facilitate & accommodate the clearance requirement by coordinating with the consignee.

For small and medium enterprises, it can be burdensome to sort through import regulations. The good news is that you don’t need the internal resources of a big company to be able to complete these import requirements. A Customs agent can guide you through the entire import process.

DHL recommends that you do not seek a Customs agent on your own. Our personal advisors can analyse your shipping needs with you and put you in touch with a trustworthy Customs broker who knows your industry and can provide the specific experience and services your business needs. With our years of experience with respect to Customs transactions, you can count on us to realise your transactions with your Customs broker. It is our pleasure to offer this service to our clients.

Please note: In some countries, the law requires you to contract a Customs broker to complete your import transactions. In others, the Customs service recommends that you contract a broker.

The Import commodities which do not belong to the below clauses can be pre-cleared upon advice & instructions of the consignee

Any commodity with a declared value of US$ 1,000

Commodities that are not controlled by any authorities such as

Cosmetics Drug Device Authority (CDDA)

Telecom regulatory commission (TRC)Controller of imports license

All commodities / shipment which does not belong to the above categories will be detained by the customs for Formal Clearance & would require the import clearance documentation / approvals as required by the Sri Lanka Customs Ordinance.